tv Your Money CNN December 23, 2012 12:00pm-1:00pm PST
. here's what's trending right now on the web. the american doctor rescued by s.e.a.l.s in afghanistan is thanking those who risked their lives to save his. the doctor says he's especially grateful to the s.e.a.l. team member who died on the mission. prince william will celebrate the holidays with his wife's family, the middletons. the royal couple turned down a chance to celebrate christmas with the queened a her very exclusive party at the royal estate in sandringham and now there's competition in the business of tracking santa on his christmas eve rounds. norad has a new tracking service, it dropped google maps in favor of microsoft's bing. we'll be back to talk to barry manilow. stay with cnn. "your money" starts right now.
just days to go before america goes over a fiscal cliff. an outcomeloing more likely every hour. washington's willingness to take america to the brink threatens its prosperity. this is about the latest movement in the negotiation between the democrats and republicans comes down to useless symbolic moves and haggling between grown men. your elected officials are wasting time while the clock ticks. house speaker john boehner announced his plan b to let bush-era tax cuts expire for earners making more than $1 million a year and he wants to set automatic spending cuts with unspecified cuts elsewhere. the speaker pulled his so-called plan b for lack of support from his own party because many republicans still beholden to grover nor quest and the ridiculous pledge want no compromise at all. the debate between the two sides centers around a balanced approach the budget. republicans say president obama wants too much revenue.
that's taxes in normal speak and not enough cuts. >> at some point we're going to have to address the spending problem that we have. we can't cut our way to prosperity. we need economic growth. many believe the fundamental reform of our tax code will help us get our economy moving faster and put more americans back to work. and more americans on the tax rolls. how we get there, god only knows. >> president obama doesn't see it that way. >> at some point there's got to be i think a recognition on the part of my republican friends, that you know, take the deal. you know, they will be able to claim that they have worked with me over the last two years. to reduce the deficit more than any other deficit reduction package. >> mohammed aladarin is the ceo
of pimco and mark zandy is a chief moist at moody's analytics and joining me in studio is christine romans. the gdp for the u.s. grew at 3.1% over the summer. that's more than double the rate of the previous quarter. you can see the chart, it's been choppy, but it looks like we're going in the right direction. america's economy is gaining pace, doing better than expected. and we've been saying the 2013 could be the year of a real economic renaissance in the united states or at least the beginning of one. talk to me about the consequences to our prosperity if washington doesn't reach a deal. >> the consequences are not good. so what the numbers are telling you is that the private sector is healing. and if the private sector were left to its own devices, it would heal faster. unfortunately, washington is getting in the way. and what we find out this week, ali, is that the problem is not just a lack of trust between
democrats and republicans, we found out that the republicans themselves can't unite. which means that the cooperative solution that you need to solve this country's headwinds becomes much more difficult, which means that the private sector will become more cautious, will higher less, will invest less, which means that our economic growth will slow down. and our unemployment rate will stop going down as fast. >> we're just starting to get some traction here, we want to keep this going. mark, let me ask you, the economy is doing better than expected. there's no question. the revisions to a lot of numbers are looking better. housing is coming back. the median price of an existing home shot up 10% in november year over year. we've been seeing six months of home values going up in a row. a lot of americans build their wealth through their homes, higher home values means more confidence going forward. first of all, are you with us on the idea that we're on the cusp of an economic comeback and that washington can do some damage to that? yeah, i think the economy is feeling a lot better at year's
end. a lot of good news on gp, incomes, durable goods orders, which is a business investment and as you point out, the housing numbers are looking very, ve good. so we have good momentum going into 2013. and i think the only thing standing in our way from a much better economy is a piece of legislation on our fiscal issues. you're absolutely right. if policy makers can't nail this down reasonably so in the next few days, couple weeks, they're going to do a lot of economic damage and good economic news is going to start to turn sour. >> christine you're watching this closely, what's your thought. >> you keep hearing republicans talk about a more balanced approach. they want more spending cuts, but it's groundhog day in washington. only the movie was funny, this is not funny. we're going to go over the cliff here. i see politics are really the problem here and i don't see any progress. any progress at all ali from where we were more than a year ago, 18 months ago when we first got into this mess with the budget control act and raising the debt ceiling in the first
place. do you agree with me, ali, we haven't seen any political progress here. >> mohammed, let's talk about the first piece of damage we may see. which we saw during the debt ceiling debate. the idea that the u.s. gets its credit rating hurt again. there's been some talk about it from fitch. the net result of lowering the u.s.'s credit rating the last time around in the debt debacle, it's kind of sad, the first spence that most people have with that is that it's not as bad as we were warned it would be. is there a real danger to the u.s.'s debt rating? and what could that mean? >> at some point there was a danger. the reason why we haven't felt it is because we've been doing better than the rest of the world. this concept, we're the cleanest dirty shirt. we're not clean, but we are cleaner than europe is right now. so we haven't felt it. my main worry is the following. if the republicans and the democrats can't get together to solve the fiscal cliff, then you
will need an external force, you will need major market selloff. you will need a major economic trauma to get them to focus. >> there are other things that have been on the table. i want to talk about a few of those, as soon as we come back. coming up, the republicans want a new formula for inflation, it's called chained cpi, it could slow the growth in payments to social security recipients, that's got some people mad. the president has said he could agree do it, but democratic lawmakers say no way. [ bells dinging ]
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to shape our curriculum, so that when you find the job you want you'll be a perfect fit. let's get to work. so far the fiscal cliff debate in washington has focused largely on taxes, tax rates, how much the wealthiest 1% or 2% americans will see their tax rates go up. tax hikes on the rich alone will not put all that much of a dent in the national deficit. could you take away every dollar from the top 1% of earners and it wouldn't fill the gap. we heard about chained cpi, a suggestion john boehner made for his proposal. i want to bring in christine romans to break this down. >> chained cpi would change the way the federal government calculate inflation. which could possibly save the government $300 billion over the next decade if implemented. normally every year, wages and prices go up. the consumer price index, the
cpi measures how much they go up by tracking a basket of goods that americans typically buy. it's important, it's used to calculate cost of living adjustments on social security. checks pay a little more each year in line with inflation, as calculated by the cpi. now one potential flaw in the system, cpi assumes people don't change their basket of the price of meat goes up. they don't switch from meat to chicken because the price of beef has gone up. they don't switch from say, arugula to iceberg lettuce, it doesn't account for how behavior changes. chained cpi presents a chained basket of goods, measuring how people react to price changes, not simply the fact that prices have changed. now chained cpi would account for fact that you're buying more chicken when beef is too expensive. that could result in a slower rate of inflation, it saves the government money on those cost of living adjustments and it in racing tax brackets on what
people earn. why is chained cpi suddenly so vital to the fiscal cliff negotiation? it isn't a spending cut or a tax hike, but it would effectively cut spending and raise taxes on some, saving the government an estimated $300 billion over the next decade. the problem is that what that means is that seniors, the longer they live, the less money they would actually take home. they would see a cut to their benefits and that's what has progressives so upset. >> politically speaking, this was a significant concession from the democrats or was it just an accounting fix? >> well you know, it was both of those things. it is an accounting fix. it is a significant concession from democrats. some democrats who i spoke to said look, maybe i would consider this maybe. but only if we could have some sort of mechanism, ali, that a senior past age 85 who would be facing six or 8% cut in benefits, maybe there would be an adjustment to make sure, especially for people who are very poor, that there would be some sort of safety net. paul krugerman has said liberal
firebrand in the "new york times" said it's a horrible idea. terrible, stupid idea and this is not something that the white house should consider at all. >> let's bring back the rest of the panel. ceo of pimco, and mark zandy a is a chief economist with moody's analytics. mark, when you say we're the cleanest dirty shirts, i wonder when it comes to negotiations we are there are republicans who will not accept taxing the marginal income. the income above $1 million and increasing that tax on the rich and you've got some democrats who won't agree to this idea of a chained cpi. bottom line mohammed, there are going to have to be tough decisions, you cannot win budget concessions without tough decisions. when you guys are looking at how the united states solves its problems, what are the obvious ways? >> the obvious way is to get together and recognize that you can only solve a long-term debt
issues in the context of high growth. you approach the fiscal problem in a way that makes sure that you also promote economic growth. so that has two implications. one is you can't do it all on one side. you can't do it all on entitlements, nor can you do it all on revenue. you've got to move on both sides, which means political compromise. people don't like it. but that's the reality. second, fiscal reform that we need over the medium term has to be put in the context of a more comprehensive program. that makes this economy grow faster and makes it more productive. what drives us crazy is that you can actually write this down. there are solutions to this. this is not europe, this is not greece. there are solutions. it's the politics that mess everything up. >> you're absolutely right. getting back to the issue of tax rates, it looked like we were getting closer. boehner offered to raise rates for those making more than $1 million a year. the rate would increase only on
the amount you made over $1 million. president obama, who insists on letting the bush tax cuts expire for earners making more than $250,000, at least that's how he presented it during the campaign. offered to let those taxes rise on those making more than 400,000 a year. we're talking marginal rates, only on income above $400,000. by the way, mark, $370,000 a year is what puts you in the top 1%. all of those levels, 250, 400, a million. what's the breakoff point at which raising rates would substantially hurt the economy. >> i think they're coming to a compromise, the president's 400 k, speaker boehner was a million. my guess is they come to an agreement somewhere around $500,000. if that's the break point in the tax increase, i don't think that does significant damage to the economy. i think it's very helpful raise
enough revenue to address the balance that mohammed was talking about. and i do think that the chained cpi is a very good way to go. it addresses some concernses about the entitlement program and spending and it's a reasonable thing to do and it's part of the balance that we need. so both of those things, you know, all of these things are going to hurt. nobody really wants to do them. but we have to to address our fiscal problems. and if you line up all the things we can do and say which is going to do the least damage. allowing the tax rates for upper inco income earners to rise and chained cpi. >> if the payroll tax deduction doesn't come back you'll get less money in your check. but with that aside. is there a larger global market reaction that we're going to see, whether it's in bonds or equities? >> well we certainly are going to see a selloff. because i think the markets were
convinced that our politicians will get our act together. so if we go over the cliff, you should look for which assets to sell off. the question is what happens in the rest of the world. remember, there aren't really very strong parts that can absorb the shock of slower growth in the u.s. and that can become even stronger engines for growth. china slowing, europe is in recession. the main concern -- and this is a risk scenario. what they call a left tale, it's not the baseline, is we get a tipping process. that one bad thing here leads to another bad thing elsewhere which comes back here. and that's why the hope is somehow, somehow, i don't know how, but somehow in the next week, washington will find a way to avoid the fiscal cliff. >> from your lips to god's ears, thanks very much. mohammed al arian. mark zandy and christine romans. as long as congress does not trip us up, we're on the way to an economic renaissance in our
we are on the road to an economic renaissance. i want to you think about the united states economy like a runner along this road. full economic recovery and prosperity is the destination, the economy right now, that's warming up with a nice jog, getting ready to break into a full sprint. gross domestic product, the broadest measure for the economy grew by an annual rate of 3.1 over the summer, more than double the rate of the previous quarter. spending by americans was the
single biggest factor in that growth and more americans are spending their money to buy a home, pushing prices upward across the country. the median price of an existing home shot up 10.1% in november year-over-year. we've seen home values rise six months in a row as more americans get back to work and take advantage of those low mortgage rates. bottom line here -- our runner, the u.s. economy, is just starting to break a sweat and that runner should start to sprint soon as america begins to reap the rewards of its domestic energy boom. we're extracting record amounts of oil and gas from shale through fracking and other technologies. pushing prices for natural gas which is used in part to generate electricity down. that helps utilities and heavy industry compete. creating more jobs for americans, all of these things put together are sending my runner, the u.s. economy, dashing ever faster down that road toward an economic renaissance. one that offers real prosperity.
real jobs for years to come. but running fast on this road requires something else -- an investment in infrastructure. and that's a subject of discussion i really had with harvard professor ken rogoff, "wall street journal" editorial righter. and i started off by asking how can you convince lawmakers that infrastructure money is well spent and how can you insure that the money is in fact well spent? >> i think you have to have firm regulatory oversight. it's not something you can just spend the money and walk away from. but there are the electricity grid, water, aging bridges, there's so many things, hardening our cyberinfrastructure. against terrorist attacks. many things. and ali, it doesn't have to all be public money. there's no reason we have to be sostatused about this. we have telephone companies, we
have cable companies, we did the r&rs that way. it doesn't all have to be public money. >> let's bring stephen moore in. i think you're going to disagree with my notion that government can be all that helpful to our runner. that government can be helpful other than by getting out of the way. i think you're going to suggest lower taxes, lower spending, fewer regulations. for the sake of this argument and analogy, accept that taxes are going up. there are many soifr who is argue that there is not a role for government in this let the markets and private industry handle it. but they haven't, and we've got substandard roads and bridges and electricity and broadband infrastructure. all of this means we're less attractive to business. do you accept that the government has a role to play in the rebuilding of america's infrastructure? >> well, sure. and by the way, i love your optimism, ali, i hope you're exactly right about 2013 and
2014. we've been spending money on the programs. a lot of the school buildings, i mean that's been going on in a large magnitude in the united states. what i like and where we might find some agreement, you know, i do think private-sector dollars can lead to a lot of this infrastructure. let me just mention one example. when you want to talk about infrastructure projects, what about the keystone pipeline. that's the perfect example of a major important and necessary infrastructure project that doesn't actually even require a dime of federal money. and yet, it's being blocked. but i like the idea, for example on transportation routes, you talk about pot holes and that extracts a cost on people. you know, in the state of indiana, they actually sold their, their highways and now are being financed and operated by a private company. in california, you actually have private roads, private toll roads that do very well. i like the idea, i think we've got to get really very sophisticated about how we finance these things. for example, used to be the gas
tax financed roads, now we can use tolls. you've got an easy pass, you can go anywhere in the country and tolls are an efficient way of financing roads. >> the federal gas tax hasn't gone down, we're consuming less gas. i'm going to be talking to the governor of illinois about this, pat quinn because they're doing a lot of building of roads. let's bring krista in here. i think underestimate the effect of fracking and natural gas in the united states and the lowering of the price of energy and what that does for heavy manufacturing. companies that use a lot of electricity. steven just talked about the keystone pipeline from alberta to take the oil from the oil sands, where you're from. i think that's probably going to happen. what's your sense of the role of energy in helping my runner run faster? >> to use your wonderful metaphor, i do run a bit and when i run road races, there's this wonderful power gel you can take when you start flagging after the first hour or so. energy is going to be like that power gel for the u.s. economy. i agree with you people are
underestimating it and it's going to have a fantastic impact. you know think about all of the time we are spending arguing in the united states about taxes. energy is a tax on energy prices are a tax on everyone. they're a tax on households and businesses, we're going to see much more available cheaper energy and that will lower the burden on households and crucially as you pointed out, and this is where i think you're going to see a great knock-on effect, it makes manufacturing more viable in the u.s. so it's not just the jobs in the energy sector, it's the fact that all all of a sudden and especially natural gas, which is hard to transport, it starts to make sense to locate those factories where the energy is the other thing that i love about the energy story is as we've discussed a lot. one of my huge concerns about the u.s. economy is well-paying middle class jobs. and i think that you know, we can't neglect the economic reality that we are seeing the hollowing out of those jobs, huge downward pressure on wages.
and the energy sector, that's not happening so much. in the actual production of natural resources, you can't outsource those jobs, so those are good jobs. >> can i give you an example of what krista is talking about? i was in north dakota a few months ago. that's where the epicenter of this energy boom that krista is talking about is going on. it's amazing, if you fly over some of these little towns in north dakota they light up at night like a christmas tree. they're burning off the natural gas because they want the heavy oil, because that's more valuable and i asked why are you burning off the natural gas, and they said, we don't have the pipelines to get the natural gas to the market. that's a perfect example of the kind of infrastructure we need. i want to mention one other quick thing. when you talk about ken mentioned telephone service in this country. that was mostly built actually with private dollars, not public dollars. >> with a lot of regulation, though. >> that's true. i guess i'm saying, i think the thing we can all agree on, if we're going to have the infrastructure we need, we are
going to need private-sector dollars to do it. >> you did set example of something that did involve government. i want to be clear about that. >> but it was mostly private dollars. >> but there was some government involved. >> you're caught, steven, admit it ali, got you there. >> this is a case that we need the private sector to take lightly. >> good conversation, great to see you all. coming up, you just heard us talk about this, do you want better roads and bridges? how about a smarter electric grid? maybe you do, but are you willing to pay higher taxes for them? it's a tough decision, i'll talk with fareed zakaria next about how we make them. with straight talk at walmart, you get unlimited talk, text and data for only $45 a month per phone. would we get the same coverage? same coverage on america's best networks. you saved $146.76 by switching to straight talk. awesome! now you can afford to share your allowance with me. get the season's hottest smartphones like the samsung galaxy s2 and get straight talk with unlimited data for just $45 a month -- from america's gift headquarters. walmart.
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if you're still listening to president obama and house speaker john boehner, you would be forgiven for thinking about the fiscal cliff fight is about taxes. >> unless the president and congress take action. tax rates will go up on every american taxpayer. >> if the argument is that they can't do, they can't increase tax rates on folks making $700,000 or $800,000 a year, that's not a persuasive argument to me and it's certainly not a persuasive argument to the american people. >> here is the rub -- the discussion centers on whether or not to let the top income tax rate jump from 35% to 39.6% on the marginal part. the part above the number of the let's call it $400,000. john boehner says don't give the government more revenue because it already spends altogether too
much. now the question is not really wouldabout that 4 billion 6% continues on what the rich would pay in taxes. the real conversation boils down to the role of government. generally speaking, democrats are willing to entertain a bigger role of government in society, republicans want a role it back. it's ideology. but a more constructive conversation would be how much do we expect to benefit from the services that government provides for us, and how much are we willing to pay for those services in exchange? that got me thinking. here's a list of countries rated on a scale of 1-10 on satisfaction. denmark tops the list at 10, canada at 9, u.s. at 8, france is 7 and japan is a 4. let's compare the satisfaction to the average marginal tax rates people pay in those countries. americans pay on average $41.7% when you factor in federal, state and local taxes, but the dans pay more, 48.1%.
and so how come these guys are happier? danish taxes pay for pok post-secondary education. canadas taxes pay for universal health care. the french pay fewer taxes than americans do and are less happy. only the japanese actually make sense, they pay higher taxes, 47.2% and they are less satisfied with what they end up with. fareed zakaria is the host of cnn's fareed zakaria gps and has a special on sunday at 8:00 p.m. and 11:00 p.m. entitled "tough decisions." i asked him are american taxpayers getting their money's worth. >> imagine a guy in germany, probably he pays particularly if he's upper middle class or upper class, he probably pays more in total taxes than his american counterpart. though it's not entirely clear once you add value-added consumption tax, for sure he's paying more. but here's what he gets in
return. he gets universal health care, high-quality. he gets a free education. from kindergarten through any master's bachelor's ph.d. program he wants and it's pretty high quality as well. he gets free retraining if he ever loses his job. he gets all the benefits like day care and things like that europe is famous for. and the person in the united states may be spending a couple of percentage points lower. but he has to save for health care. he has to save for long-term care when he gets old. he has to save for his children's college education. perhaps for high school education. and certainly for any kind of retraining he may need. so it's not entirely clear that europeans have such a bad deal. >> the question here, it is a tough decision. we are deciding that we want less government, right. so the idea of whether you pay 35% or 39.6% as your marginal top tax rate is really code for
a 35 or lower, i get less government. grover norquist leading the charge for tax increases say i want to drown government in the bathtub. >> here's the problem with that americans like government. what we have for the last 30 years is done is say we're going to have low taxes but we still want lots of government. we've made up the difference by borrowing. i think one part of what john boehner says, which is quite right. you can't keep doing this forever. at some point you've got to get that habit under control. now the problem is the republicans realize that large role for government is pretty popular. that's why they don't i'dfy specific cuts. >> they say we'll cut this amount of money but nobody will tell you where it's going to come because the things they'll cut is going to hurt. the low-hanging fruit is gone. >> the role of government, the more interesting discussion, if you cut health care costs by saying we're going to improve quality but reduce cost. you can do that. but you're going to have to have panels, you may call them death
panels, panels that say look, this stuff is not worth it. we're not going to reimburse you. this long-term care is not worth it. you know they're going to have to be judgments made and that's a role for government that americans are very uncomfortable with. that is government deciding what health care you get. but that's how the europeans and the taiwanese and all of these guys do health care at half the cost we do with better result. >> this sunday at 8:00 p.m. make sure to catch fareed zakaria's new special, "tough decisions" from the raid on bin laden to henry kissinger's role in opening china to the west. an inside look at how top leaders make tough decisions, worth catching sunday night at 8:00 p.m. eastern on cnn. rib-shattering potholes, decaying bridges, electrical systems that haven't been upgraded since the 1950s. we're not talking about cuba or india. we're talking about america. which earns a d grade from civil engineers for its infrastructure. there are ways to fix them that create real jobs. tell you about it, when we come back.
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but look at the list of cities with the best infrastructure in the world. what's missing from this list? america. not a single american city makes the top ten. the highest by the way in america is atlanta at number 13. dallas at number 15. washington, d.c. at number 22. in the world. the richest country in the world doesn't make the top ten in terms of city infrastructure. this is from mercer by the way. the survey, it ranks cities based on electricity and water infrastructure. congestion, public transportation. and airport effectiveness. which is probably what got some of these american cities on to the list in the first place. americans shouldn't be surprised. china spends about 9% of its total economic output on infrastructure. europe spends about 5%. 50 years ago by the way, the u.s. spent about 5%. now we spend half as much at 2.4%. richard flores is a professor at the university of florida and a
senior editor at "the atlantic. "s "u. ." >> u.s. cities are the great strength of the america economy's comeback. when you look at studies, cities are a key part of our productivity and innovation advantage. we have clearly lagged at frastructure spending and we need to spend $2 trillion to get it up to par. one of the things that's so important with having ken on. in his critical book at systemic crises and how these play out. we found in looking at his work in an urban context is the key to recovery. is not just government spending, it's not just a keynesian demand
side spending. it powered the recovery from the graest crisis from the last 19th century by building the and powering the recovery from the great depression by building the suburban interstate highway netwo network. with cities being the key and density, we've got to invest in public transit, high-speed rail. reset our economy by investing in infrastructure in our cities for a new round of growth. >> what a great introduction to ken who is back with us. you're in this discussion because you have said all of these things, you say infrastructure is key to economic growth and that cities are key to the economy. large cities produce 83% of economic output in the united states. the 30 largest cities in the u.s. account for half of all gdp. we're all in favor of good infrastructure until it comes time to pay for it. you say that some money can come from the private sector, we've had high-profile examples of
public-private partnerships that have gone wrong. how do city governments make sure that city residents get what they pay for? >> i don't think there's any simple answer to this. one reason we might want a national infrastructure bank is not for the money, but to provide oversight, you have somebody to go to when you have a project, a regulator. an interlocutor. we should alloy private money. there's an additional problem. about so-called eminent domain. you can't just clear things out in china they used to at least just knock on your door and say you're moving. we're building a road here. you got to move out of your apartment tomorrow. we can't do that. it makes it trickier in our older cities to rebuild in the way they did in china. >> it's an interesting analogy. i spent time in china and india in the last year. everybody talks about china, india, you can't move people out
at all. so democracies have a little more problem with these massive infrastructure builds. the other issue you want to talk about is you say the u.s. is focused too much on car infrastructure. americans are now shifting to public transit. taking $10.4 billion trips on public transit. last year, 2012 is expected to exceed that part of the problem is that public transit investment and infrastructure. >> we're up on public transit trips as you said. we're up on light rail trips another 2%. up about 5% on public transit trips. the people that are located near public transit and near subway systems and light rail. they've seen their housing prices go up the most. that's what people are desiring, one of the things i would like to do is obviously we're not going to give up on the suburbs, we're not going to give up on the car. but let's pay for using the darn car. let's tax by tolls, let's make
sure congested cities like new york, have congestion pricing so it's not a free good. let's make people who use the car pay for it and let's tilt the balance of our infrastructure funding, to rebuild our public transit infrastructure. and i travel into new york all the time and i travel into canada all the time. my wife always remind me of the difference of traveling into the pearson airport versus new york. we've got to put more money. we know that airports, according to a whole range of recent studies are big economic generators, about on the same plane as our high-tech industry clusters, we need to rebuild our airport, invest in our public transit. let's pay for the roads. >> do you think that there are some things that rank higher than other things or should just be done as a portfolio. that there are a lot of things that need to be fixed. richard made reference to the $2 trillion to get our infrastructure up to a reliable
point. >> i want to fix up on the idea of pricing things. which people in the united states haven't accepted. so it's if a really busy road, you pay more to use that. that used to be impossible. you couldn't put a toll booth every two miles. now it's nothing, it's easy to achieve that. that would make a huge difference in making it more efficient. i agree strongly with richard, that we emphasize the car way too much. we are past that, the cities are at the core of our development. they're probably at the core of our future for a long time. we need to improve public transport. you can't just stuff more and more cars into the cities. which we're trying to do. you can see that everywhere. >> great conversation, thanks for joining me. you both have excellent books that you should be reading to get smarter on these topics. we're on the road to use that
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solution, public-private partnerships. government and business working together. it works else where in the world. but it is scarcely used in the united states. it's not a one size fits all solution there are many different ways for this kind of collaboration to work. but in an ideal world, it would look something like this say we wanted to build a new highway for instance. you use some public money. some public capital, that's state, government money. and you would attract private capital, either through an infrastructure bank, which we've discussed here or by issuing bonds for the project. now there's big money waiting in the private sector to get the steady, long-term returns that infrastructure investments provide, that's how you get the money. then the government enlists a private company to con structure and operate the highway. once it's up and running, they charge fees to use the once it's up and running known as tolls. the money generated at the tollbooth generates money for the public, governments and private investors.
this kind of partnership works with any infrastructure that has user fees, waterways, electric and gas grids, broadband systems, the list is endless. one state leading the way in these type of partnerships is illinois. governor patrick quinn has made historic investments in infrastructure. thank you for being with us. your illinois plan now put $31 billion of capital to invest in infrastructure and public/private partnerships. you created an initiative to expand broadband networks statewide, as an example. tell our viewers what role government played and the private sector played to make this work. >> we're still going. we added $12 billion with our tollway system, ali, and you mentioned about the public/private partnerships. we're very interested in that with respect to our roads and also for our broadband deployment. we have 4100 miles of broadband. we're laying fiber right now across illinois. we've done over 7,000 miles of roads, over 1,000 bridges.
we like to build buildings as well, school buildings. and so anytime we can tract private interest, we're always interested in that. we understand that the government does have to put some money on the table. that's what we're doing, and you know, there are opportunities for private investors. we passed a law in illinois for public/private partnerships and want to build a new airport south of the metropolitan area of chicago. we really are looking at a public/private partnerships. >> airports are the one thing we do in america that people get when it comes to the partnerships. there's always criticism of this, criticism that the governments don't have money, there are criticisms that governments don't make the right decisions. the city of chicago famously struggled with its public/private partnership on its parking meters. in 2008, the city leased its system to a group of private investigators. they did a poor job of managing the transition. there were steep rate hikes and confusion and it resulted in the downgrade of the city's credit rating.
i know, governor, that's not your watch, not one of your projects. >> no, that's right. >> what are the lessons of that type of thing for your own initiatives? >> you got to be very careful. you know, the city also did one with the skyway, a bridge across from chicago to indiana. that was done in a better fashion. if it's not carefully done, it can really backfire. so that's why we take each step and do it in a very reasonable sound way. we're embarking on this. this is brand new for our state of illinois. we do see, for example, the federal gas tax not just being able to finance the kind of infrastructure and highway and bridge improvement and expansion we've had over the last half century. the federal gas tax is declining. and with fuel economy in our vehicles and we want that, we're just not going to have the revenues from the gas tax to build the roads and repair the roads we need for the future. so we do have to look for these new ways of financing important matters that create jobs today. a lot of construction jobs are
created. at the same time, they lay the foundation for economic growth for decades to come. so investing in things like roads, bridges, rail systems. we're doing high-speed rail from chicago to st. louis. we'd like to do high-speed rail, super high-speed rail, from chicago to champaign on to st. louis and indianapolis. that's going to require private investment if we're going to get the job done. >> i was over in china. it was one of the most impressive things about the place, high-speed rail cutting travel time. of the cities with the best infrastructure in the world, more than half of them are in europe. take a look where public/private partnerships are happening. part of the reasons we're not seeing many of these in the united states is that the legislative structure for them only exists in 31 states.
in your state, there are several large-scale roadway projects you've been talking about. illinois has been looking at for a long time getting involved in. when you do projects like this, there are always accusations that it's pork and favors to everyone. where do you decide where they need to go? >> it's a matter with the legislature. elected representatives of the people have their priorities. we have a five-year plan in illinois for our highway system, and also a plan for our tollway system. we tell people ahead of time what the priorities are and people work together with us in the executive branch. when we're building a bridge across the mississippi river, as we're doing right now near east st. louis, that's something that everybody understands. there's a bridge in minneapolis that fell in to the river. and we don't want that to happen anywhere in our country and certainly not in our state. so we want to work together with people on something as big as a bridge that might take six years to build. we also need to build a bridge near the quad city airport, rock island and moline, build a bridge across the mississippi to iowa there.
>> my friend, christine romans, will be very happy to hear that you guys are building a bridge to the quad cities. she's from that part of the country. great to see you. >> we're bridge builders. >> thank you, governor quinn. i've given you my take on infrastructure and the fiscal cliff. why are you listening to me? millennials are the future and i have remarkable answers to change the way you think about work and life. i'll tell you about it on the other side. you're watching "your money."
discussion on millennials, those born after 1981, and i discovered that those of us with gray or no hair can learn a good deal from generation y, as they're called. seismic economic shifts in an era of permanent freelancing, disruptive technology and nonstop globalization mean that the job security that older generations were accustomed to is now gone. according to the department of labor, the average worker now stays at his or her job for just 4.6 years. so you've got to be flexible to survive. second, you'll need more training. these kids are the most educated bunch in history, and they will assume that they need more education in the future. this economy handed millennials lemons, so they're acquiring skills to make career lemonade. and if you're lucky enough to have a job right now, focus on what you get out of the experience more than what you get from the job itself. many of your youngest colleagues don't expect to stick around long enough to climb the ladder that more seasoned workers had done in the past.